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Sorensen Enterprises has provided the following monthly income statement: Total Product A Product B Prodict C Sales $100,000 $50,000 $20,000 $30,000 Variable expenses 60,000 30,000

Sorensen Enterprises has provided the following monthly income statement:

Total Product A Product B Prodict C
Sales $100,000 $50,000 $20,000 $30,000
Variable expenses 60,000 30,000 10,000 20,000
Contribution margin 40,000 20,000 10,000 10,000
Fixed expenses:
Facilities cost 9,000 4,500 1,500 3,000
Depreciation 6,000 3,000 1,200 1,800
Supervisors' salaries 5,000 1,500 500 3,000
Maintenance 3,000 1,500 600 900
Administrative expense 10,000 3,000 2,000 5,000
Total fixed expenses 33,000 13,500 5,800 13,700
Net operating income 7,000 6,500 4,200 (3,700)

The owners are considering dropping Product C. The following additional information is available:

- If Product C is dropped, sales volume of Product B is expected to drop by 10%.

- The $3,000 facilities cost for Product C represents the cost of a seperate facility used to manufacture the product.

- The company's total depreciation would not change if Product C was dropped.

- If Product C were dropped, it would be possible to cut one of administrative staff employees. Their salary totals $2,000 per month.

- If Product C were dropped, total maintenance costs are expected to drop by $1,000 per month.

Question is: By how much would the net operating income of Sorensen increase or decrease if they drop Product C?

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